The Motley Fool

AIMS AMP Capital Industrial REIT’s Latest Earnings — Higher Revenue but Lower DPU

Earlier this month, AIMS AMP Capital Industrial REIT (SGX: O5RU), or AA REIT, released its 2019 third-quarter earnings update. AA REIT is a real estate investment trust (REIT) that focuses primarily on industrial properties. It has 25 properties in Singapore and a 49% stake in an Australia property.

Here are nine things investors should know about AA REIT’s latest results:

  1. Gross revenue for the reporting quarter grew 3.3% year on year to S$29.8 million, while net property income improved by 1.1% year on year to S$19.4 million.
  2. Yet, the REIT’s distribution per unit (DPU) was down by 4.6% year on year to 2.50 Singapore cents.
  3. Based on AA REIT’s annualized DPU of 10.0 Singapore cents (calculated using year-to-date DPU of 7.5 Singapore cents) and its closing unit price of S$1.40 (as of writing), the REIT has a trailing distribution yield of 7.1%.
  4. As of 31 December 2018, the REIT’s gearing stood at 33.5%, which is a safe distance from the regulatory ceiling of 45%.
  5. The REIT’s portfolio had an occupancy rate of 93.9% at the end of the quarter.
  6. The weighted average lease expiry (by net lettable area) was at 2.74 years as of 31 December 2018.
  7. AA REIT has 168 tenants as of 31 December 2018, of which the top 10 tenants accounts for 52.6% of overall portfolio gross rental income.
  8. AA REIT’s share of results from its joint venture in Australia fell by 5.0% year on year to S$3.5 million.
  9. The redevelopment of the property at 3 Tuas Avenue 2 and asset enhancement initiative at NorthTech remain on track for completion in the second half of 2019.
  10. Here are the comments from the REIT on its outlook:

“The pace of growth for the Singapore economy is expected to moderate in 2019 as compared to 2018, with the manufacturing sector likely to see a more modest pace of expansion in tandem with the growth outlook of Singapore’s key final demand markets, including the US, Eurozone and regional economies. At the same time, uncertainties and downside risks in the global economy have increased, including elevated trade tensions between the US and the PRC and expected rising of interest rates. If overall regional trade flows decline due to trade tariffs, the Singapore economy will likely be impacted due to its dependence on trade and manufacturing activities. But being a regional hub, Singapore could potentially capitalise from the possibility of businesses reassessing their supply chains and sourcing locations.

Against this external backdrop, the Manager will continue to stay the course on active asset and lease management and to optimise AA REIT’s portfolio through sector and tenant diversification across its portfolio of 26 properties, supported by a prudent capital management approach.”

Maximise dividends on your REITs with our brand-new Complete Guide To Buying The Best Singapore REITs. We reveal everything we think you need to know about finding the best REITs that hands you a fat dividend cheque ...even if you have no REITs experience at all! Get instant access to your 100% FREE, actionable, 42-page PDF guide here.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.